Saturday, March 11, 2006

A new message from our source Doc in Africa is obviously urging Sir Emeka Offor to bear the burden of achieving greatness by opening his company to reforms that include far more communication with stockholders.

Doc's message is self-explanatory:

I do not have any big news today (just one of my connections indicating that Anadarko could well be acquired by XOM, but not immediately, so the impact on the JDZ situation would probably be negligible) but I must say it is surprising to see that the share price is down for most companies involved in the supposed March 14 PSC signing, some noticeably. It is not a very positive sign, nor is the careful language in the STP statement which clearly gives them an out.

Let us hope that all remaining PSCs will indeed be signed on March 14.

I thought I would offer a little more analysis on two *crucial* aspects of the situation which I alluded to in my previous commentary, share price and company legitimacy. Again I have excellent connections but this is only my own opinion, one should do one's research and come to one's own conclusions. Incidentally, I am still on the road but some of the posts that equated me to you were forwarded to me - you and I could not possibly be more different people, and those posts gave me a verygood laugh indeed. You are probably used to this, but I must say I was quite surprised by the lack of civility in some of these posts. I was less surprised to learn that some of the most mean-spirited and hostile comments came from the biggest board manipulators and share flippers.

Very telling indeed.

Depending on what experts one consults, as it stands now ERHC's stock trades at about 25% of what it should if it had been manipulation-free, and the share price should be at a level between 7 and 12 times the current 80 cents or so after signing of PSCs and proper payment of all fees in remaining blocks.

Why such a strangely low share price?

This goes way back. Allow me to share a translation from a local dialect of what one a member of the Offor clan was heard saying a good while back: "Those American investors are as dumb as cows, and they are even easier to milk (laughter) - a nine year old boy could drive the whole herd." I will admit that neither I or my source took this seriously *until* we looked into trading records, much later. We did have the advantage of a longer span to look at, and indeed this behavior has been clear as the light of day for experienced level 3 traders (anyone with a high-level broker can verify this, but a keen eye coupled with common sense should yield the very same observations). I am also told that a few smart investors have occasionally posted about it on the non-censored message boards, almost always to deaf ears.

It is believed here that the "Offor clan" controls over 70% of the stock. His own *official* shares stay put offshore (out of reach of U.S. officials) but the rest is closely watched by some of his most trusted men. They are said to have been working schemes with certain Market Makers and small hedge funds to collapse or walk down the share price at will, and subsequently allow modest runs, which they then kill once they have made a few millions (note that they have easily controlled runs of*any* size in this stock; the hours are good, too). There has *never* been any real intention on Chief Offor's part to be listed on a major exchange; this rumor was cleverly started by him a long time ago and spread around by some of the original ERHC dealmakers who thought that it would give the share price a major spike so that they would make the kind of profits they had been promised. Little did they know. They were played and no wonder some are still furious!

Could this type of behavior change? And what about validation/legitimacy for ERHC?

Loosely translated, I would like to share with you something that was passed down to me by one of our elders: "It is when a man faces the most difficult decisions that he will let others know what is truly in his soul." Well, it will be *very* easy indeed to see if Chief Offor still remembers his roots and does turn into a *true* businessman after all.

I completely understand why some nervous shareholders would see PSC signings as a big "finally, validation!" hooray for ERHC, but sadly, that is not how things work. Validation and more importantly, legitimacy for ERHC will come not from a signature but from what the company does *AFTER* the paperwork is taken care of, all fees have been paid (one should not assume that all will, or that the process will follow itscourse smoothly). ERHC does have *enormous* potential as an O&G company and it *has* arrived at a major turning point. But as I wrote earlier, I unfortunately do not see much improvement on the ERHE share price or the company's disastrous image after PSCs *UNLESS*:

* Chief Offor gives the clan a direct order to once and for all stop choking the stock and profiteering from it. Only then will the market be able take its natural course.

* The many miilions of dollars received from Addax (and possibly Sinopec or others) as a part of the deal stay in the ERHC coffers and aren't swindled in some way, or eaten up in short order thru those famous "consultants' fees" or other schemes that so far have mostly benefited insiders.

* ERHC staff, contractors, and even CEOs are no longer treated like throwaway material. This is widely known and reflects very poorly on ERHC.

* Likewise, investors are treated with respect and regualrly updated. This has also been widely known and reflects even more poorly on ERHC.

* ERHC promptly develops a multi-year business plan - this should have been done long ago - and presents it to its shareholders.

* The ERHE stock is quickly moved to a larger U.S. exchange (Nasdaq comes to mind). This stock has no business being on the OTC *unless* one primarily wants to continue fleecing the shareholder.

* Generally speaking, immediate and decisive actions be taken to *PROVE* that the Nigerian-owned American company ERHC is not a scam enriching one man and his clan, but a true business. I know there are many cynics, but there is genuine hope in some influential circles at Aso Rock, the NNPC, the Petroleum Ministry, etc., that Nigeria *can* have its own efficient, competitive O&G industry. There is also a whole new local workforce - such as the one trained by Addax thanks to the wisdom and vision of Mr. Jean Claude Gandur - that goes to work to *really* work and get things done, just as you do in America. Nigeria would suffer a devastating blow if ERHC, clearly the biggest potential success story in the history of that fledgling industry, turned out to be just the opposite. And indeed *THIS IS THE CENTRAL QUESTION*: Will Chief Offor bleed ERHC to death as he has done with so many other companies - except Chrome, which lives through very lucrative government contracts - or will he not?

I can assure you that there are very large investors - some very well-known - who would do this stock much good if the word gets out that they own it. Post-PSCs they will be waiting to see much heavier volume and a strong price spike for a few days followed by a regular increase towards the levels I stated above - notwithstanding the usual small fluctuations due to swing traders and other normal market factors ofcourse. Only then will they get in, *BUT* they will be watching like hawks for *any* sign of past ERHC insiders' behavior. I would urge the same kind of caution on the part of small retail investors.

The good news is that it will be very easy for the whole world to see which decision Chief Offor has made. Stakeholders, government officials, investors, and all others will only need to look at the ERHC share price after PSCs, and they will know.

Will Chief Offor prove to be a Great Man or will he prove to be precisely what the Nigerians expatriates make him to be?

On a personal note, I hope it is the former. Emeka Chuka Offor *could* be remembered as our own Richard Branson, and that would make many of us proud.

About Me

... My greatest achievement was to win a First Amendment lawsuit (Shea v Reno) against Atty. Gen. Janet Reno over the First Amendment, in which I got a law declared unconstitutional in Manhattan Federal Court and was affirmed by the U.S. Supreme Court.
I've been a reporter almost all my life, and have worked at or published in publications like The Reader's Digest, Esquire, Argosy, the Los Angeles Times and the San Francisco Chronicle. I was a 1970 Pulitzer Prize nominee for my stories in the Village Voice, and am an investigative reporter who once got the President's nominee to the SEC withdrawn.
I'm also a native New Yorker who grew up on a farm in a small village that is now an important suburb of New York City. We still live in our pre-Revolutionary War family farmhouse there. I lived in Marietta, Ga., and Norman, Okla., as a kid, and went to the University of Oklahoma, Orange County Community College in Middletown, N.Y., and Antioch College in Columbia, Md.
I lived in Beverly Hills and Hollywood, Calif., for 26 years until moving to Bradenton, Fla., in 2003.